Middle Class Key to Rise of Manufacturing in Central Mexico

Commentary by John Paul McDaris

Much has been written about Mexico’s growing middle class. This New York Times cover article is just one recent example. It looks at how the level of jobs in Mexico manufacturing plants has risen, with respect to the technical expertise and know-how required. The days of sole focus was on low-skilled, grinding assembly work are long gone. Now the issue is whether Mexico can respond to the growing need for educated labor.

On a recent visit in which Entrada Group led a group of American manufacturing C-level executives on a tour of central Mexico locations, we saw some incredible examples of on-the-job technical training that companies are offering, both to train from within and also to reward top performers. Training programs, whether led by the state or the companies themselves, are truly cutting edge, indicating the commitment to respond to the demand for skilled talent.

On that same trip, we visited Guanajuato’s inland port park in Silao. We got an external view of the Volkswagen and Pirelli plants, both of which were enormous. When you see in person the plants the largest manufacturers in the world are setting up in central Mexico, it is even more meaningful than reading news stories about billions and billions of dollars being invested here – seeing is believing. The investments are here and they are still growing. That’s why many are optimistic about growing opportunities for Mexico’s middle class.

Companies like Pirelli and Volkswagen go so far as to send indirects (and even directs in some cases) to Europe for training. This is necessary because skilled labor in Guanajuato is still at a premium with talented engineers hard to come by. So these companies are letting the state develop their own labor long-term, but for immediate needs they are training on their own, even if it entails a trip to Europe.

Of course with growth of the Mexican middle class, additional opportunities to tap into the Mexican domestic market arise. Personally, I get the sense that Mexicans working in the auto industry feel they are increasingly making products for their neighbors, rather than some far-off consumer they would never meet in the US or Europe.

Source: New York Times

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